NATIXIS - 2018 Registration document and annual financial report

NON-FINANCIAL PERFORMANCE REPORT Managing environmental & social risks

An organizational structure has been set up to involve both the business lines and the ESR Department in assessing and managing transactions. The process includes an assessment of the quality of existing E&S documentation prepared by the client (or client advisory services, if such documentation has not yet been drafted), the measurement and classification of the potential E&S impacts and risks, and, where necessary, the consultation of external specialists. It also provides for the drafting of an action plan for impact mitigation and correction measures, which is included in the financial documentation. Compliance with the action plan is monitored over the life of the financing facility. Natixis’ credit approval process includes a summary of key issues used to assess a project. Details of the analysis and decision-making process, the resources used and full information on transactions audited in this way are available in the annual Equator Principles report (published before July 31 each year and available on the Natixis website. (1) Assessments performed beyond the scope of the Equator Principles Mindful of the great diversity of client transactions and financing solutions, Natixis ensures the same level of vigilance on the underlying E&S risks of certain types of transactions outside the scope of the Equator Principles. These include acquisition financing transactions not associated with an investment program, financing that is, by nature, for multiple purposes, transactions involving portfolios of assets too large for a dedicated assessment, or certain kinds of assets. In each of these cases, the quality of governance and management of the E&S risks inherent to the industry in question are assessed on the basis of current international best practices and standards, and the services of external consultants are called upon if necessary. Analysis of reputational risk associated with involved parties For all the financing transactions referred to above, and also when deemed necessary for any other transaction, an analysis is performed to determine whether the borrowing company, its operator or main shareholder has a history of poor management of its operations, from an environmental, social or health and safety standpoint. In the interest of establishing lasting relations with its clients, the objective is to raise awareness among the business lines—before a credit decision is made—of all the situations that can give rise to reputational risk, and where necessary to consider appropriate measures. A strengthened client assessment system In respect of French law on duty of vigilance, Natixis is working on an additional tool for assessing the quality of its clients’ environmental and social risk management. The system, which is currently being devised, will be used to assess clients of the Corporate & Investment Banking business in the onboarding process and, subsequently, on a regular basis, at a frequency determined on the basis of the nature and degree of E&S risks at hand. The assessment process will gradually be applied to the division’s portfolio of existing clients, taking into account the schedule for periodic renewals of financing authorizations.

The screening process will involve two levels of assessment: the first level, covering most of the bank’s clients, will involve a assessing 15 different types of E&S risks relating to the client's governance, social/societal and environmental issues and its supply chain. A dedicated client assessment grid will be applied to each of the 10 business sectors best representing the bank's commitments, taking into account the characteristics of the client's business activity and its office locations. The results of the first assessment will be cross-referenced with those of a systematic controversy check, as facilitated by an external data provider; the second level of assessment, focusing on clients identified as a being the most sensitive to risk, will involve an in-depth, qualitative analysis of the latter's E&S governance. This generally requires making direct contact with the client in order to specify the systems required for identifying and mitigating the main E&S risks. This client assessment process is to be built into the bank's existing systems for establishing new client relationships and granting loans, involving the business lines, as well as the Compliance Department, Risks Department and ESR Department. The process is to be implemented following a test phase sometime in 2020. The French law on the duty of vigilance requires Natixis to prepare, publish and implement a duty of vigilance action plan containing measures that can identify and prevent the risks of violating human rights and basic freedoms, harming the environment, and endangering occupational health and safety, associated with the activities conducted by Natixis as well as its subsidiaries, subcontractors and suppliers. Launched in 2017, the duty of vigilance project is overseen by Natixis’ ESR Department and involves several other departments: Purchasing, Human Resources, Logistics, Compliance and Legal. Several additional projects were initiated at the same time, with the aim of establishing a duty of vigilance plan for Natixis employees at its own offices, and also for its purchases of products and services. Work was also begun to expand the due diligence procedures implemented in respect of the bank's financing activities. Lastly, Natixis’ Compliance Department adapted the bank's whistleblowing system to take new regulations into account (including, in particular, the duty of vigilance, but also the Sapin II law). Duty of vigilance in purchasing Since 2017, Natixis’ Purchasing Department joined forces with BPCE Procurement to create an economic interest group and share thoughts and ideas on responsible purchasing: The socially responsible purchasing policy is a source of strategic and operational leverage for implementing the BPCE and Natixis ESR policy. The main objective of the policy is to promote more eco-friendly products and services that provide guarantees, and even added value, at the social and societal levels. DUTY OF VIGILANCE 6.4.2

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https://www.natixis.com/natixis/jcms/ala_5415/fr/gestion-des- risques-environnementaux-et-sociaux (1)

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Natixis Registration Document 2018